Unaudited interim results for the six months ended 31 August 2016: Sens Release and Commentary

Unaudited interim results

Raubex Group Limited (Incorporated in the Republic of South Africa) Registration number 2006/023666/06

Share Code: RBX ISIN Code: ZAE000093183 ("Raubex" or the "Group")

1 Raubex Group Limited Unaudited interim results for the six months ended 31 August 2016

Highlights

Revenue up 22,5% to R4,76 billion

(H1 2016: R3,89 billion)

Operating profit up 19,9% to R394,7 million

(H1 2016: R329,3 million)

HEPS up 22,1% to

(H1 2016: 107,0 cents per share)

Cash flow from operations up 44,4% to R541,4 million

(H1 2016: R375,0 million)

Capex spend of

(H1 2016: R278,5 million)

Order book of

(H1 2016: R8,2 billion)

Interim dividend of 45 cents per share declared

"The Group has delivered a solid all round performance for the first half of the year supported by optimum conditions in terms of bitumen supply, weather and order book quality.

The Materials Division reported good results contributing nearly half of the Group's operating profit for the period. The Road Construction Division continued to execute well on its current contracts. However, very tough competitive conditions persist and management's focus is now on order book replacement. The Infrastructure Division has grown its order book and the renewable energy sector offers encouraging prospects for further work.

From an industry perspective, we are pleased to have reached the settlement agreement with the Government which paves the way for a healthy working relationship and affirms our commitment to the transformation of the construction sector."

Commentary

Financial overview

Revenue increased 22,5% to R4,76 billion and operating profit increased 19,9% to R394,7 million from the corresponding prior period. These results were supported by a consistent supply of bitumen that enabled a strong recovery by the Road Surfacing and Rehabilitation Division, which includes the Group's asphalt operations. The Road Construction and Earthworks Division continued to execute on its quality order book, while the Infrastructure Division saw increased activity in construction works related to solar energy projects and in the affordable residential housing market. Operating conditions continued to favour the Materials Division's overall performance although a depreciating foreign currency in Mozambique, and a reduction in iron-ore material handling activities in the Northern Cape, resulted in a slightly softer margin.

Profit before tax increased 23,2% to R373,6 million (H1 2016: R303,2 million) with the effective tax rate increasing slightly to 29,5% (H1 2016: 29,2%).

Earnings per share increased 22,9% to 132,7 cents (H1 2016: 108,0 cents) with headline earnings per share increasing 22,1% to 130,6 cents (H1 2016: 107,0 cents).

Group operating margin decreased slightly to 8,3% (H1 2016: 8,5%).

Net finance costs decreased to R22,2 million (H1 2016: R26,0 million) due mainly to higher cash balances during the period and slightly lower interest-bearing debt. Total non-cash finance costs amounted to R1,6 million for the period.

Cash generated from operations increased 44,4% to R541,4 million (H1 2016: R375,0 million) before finance charges and taxation.

Trade and other receivables increased by 21,1% to R1,82 billion (H1 2016: R1,51 billion). This was mainly due to the increase in revenue as a result of the consistent bitumen supply as well as the increased activities in the Infrastructure Division. Payment delays from the Roads Development Agency in Zambia continue to be experienced. No payment was received during the period and an amount of R160,2 million was outstanding at 31 August 2016 and recorded in accounts receivable.

Inventories increased 5,9% to R585,4 million (H1 2016: R552,7 million).

Construction contracts in progress decreased by 18,8% to R343,9 million (H1 2016: R423,4 million) mainly due to contract milestone achievements on the solar projects, a higher percentage of certified revenue and collection of retentions.

Trade and other payables increased 25,7% to R1,56 billion (H1 2016: R1,24 billion), mainly due to the increase in cost of sales as a result of the consistent bitumen supply as well as the increased activities of the Infrastructure Division.

Borrowings decreased 3,5% to R1,04 billion (H1 2016: R1,07 billion).

Capital expenditure on property, plant and equipment decreased 15,7% to R234,9 million (H1 2016: R278,5 million) and is mainly related to the replacement of assets to maintain current operations.

The Group's net cash outflow for the period was R60,3 million with total cash and cash equivalents at the end of the period of R896,0 million. The Group's healthy cash balance and improving net debt position allowed for a specific repurchase of 7,5 million Raubex shares on 20 July 2016 for a total consideration of R120 million. These shares were subsequently cancelled and the weighted average number of shares in issue during the period adjusted accordingly.

Raubex Group Limited Unaudited interim results for the six months ended 31 August 2016 2

Commentary (continued)

Operational review

Materials Division

The Materials Division, which includes the Raumix operations, comprises three main disciplines including commercial quarries, contract crushing and materials handling and processing for the mining industry.

The division reported good results for the period, contributing 48,4% towards the Group's total operating profit. Favourable operating conditions were experienced in the commercial quarry operations as well as the material handling and processing operations. Contract crushing operations in Mozambique were completed during the period and the depreciation of the Mozambique Metical resulted in a R10,3 million foreign exchange loss being realised. While conditions remained healthy where the division is exposed to the copper, diamond and gold commodities, reduced iron-ore handling operations in the Northern Cape contributed to the softer margin being reported.

Revenue for the division increased 7,2% to R1,28 billion (H1 2016: R1,20 billion) while operating profit decreased by 13,2% to R191,2 million (H1 2016: R220,3 million).

The divisional operating profit margin decreased to 14,9% (H1 2016: 18,4%).

The division incurred capital expenditure of R136,7 million during the period (H1 2016: R171,6 million). The division has a secured order book of R1,75 billion (H1 2016: R1,72 billion).

Construction Divisions

Road surfacing and rehabilitation

This division specialises in the manufacturing and laying of asphalt, chip and spray, surface dressing, enrichments and slurry seals and includes the operations of Tosas, a company specialising in the manufacture and distribution of value added bituminous products.

The division reported good results supported by a stable order book and healthy road maintenance spend at both National and Local Government level. The severe bitumen supply shortage that affected the prior period as a result of unplanned refinery shut downs was resolved and a consistent supply of bitumen during the current period led to a more normalised level of work and strong recovery in the results.

Revenue for the division increased 41,7% to R1,91 billion (H1 2016: R1,35 billion) and operating profit increased 189,0% to R116,3 million (H1 2016: R40,2 million).

The divisional operating profit margin increased to 6,1% (H1 2016: 3,0%).

The division incurred capital expenditure of R43,2 million during the period (H1 2016: R55,8 million). The division has a secured order book of R3,04 billion (H1 2016: R2,83 billion).

3 Raubex Group Limited Unaudited interim results for the six months ended 31 August 2016